Author: barryfisher

In Weed v Royal Bank of Canada (2017 CarswellNat 343) Adjudicator Michelle Somers heard an unjust dismissal case for 14 days, with 9 witnesses and ” voluminous ” documentary evidence.

Having found that Mr. Weed was unjustly dismissed , the Adjudicator declined to order reinstatement for the following reasons :

Reinstatement
196. It is well-established that s. 242 of the Code gives the Adjudicator broad powers of compensation, including reinstatement “Where an employee has been dismissed unjustly, there is a presumption in favour of reinstatement unless there is clear evidence to the contrary”: Pecoskie and Atomic Energy of Canada Ltd., 2015 CarswellNat 5573. The test whether there is a relationship of trust between the employer and employee is an objective one.
197. Counsel for RBC submitted that reinstatement would not be appropriate, while Counsel for Weed went no further than to acknowledge that I have the right to consider it In an October, 2014, email, Weed told a prospective employer that he was going through the Labour Board so he could have his position back with RBC but that he was sure that was a bad idea.
198. Weed believes that his role as a financial planner is to serve the best interests of his clients. He believes, apparently sincerely, that his employer’s emphasis on sales conflicts with those interests. RBC had shifted its business emphasis during Weed’s employment towards a drive to increase sales of its products, and I conclude that Weed either had difficulty or refused to accept this shift Prior to the onboarding of Leblanc as his manager, he had a clean record. Indeed, he was a very good performer. There may or may not have been insufficient training in the new business model.
199. These factors are not sufficient to excuse some of the decisions that Weed made during his employment As the Adjudicator said in Farrell v Royal Bank of Canada [1998] CLAD. No. 793, “My conclusion that the Bank did not meet the just cause standard in dismissing Farrell should not be understood as a vindication of her work performance in that regard.” [para. 144]
200. Although he did say to Leblanc and in his Decision-Making Exercise that he would change his conduct to be more in line with his employer’s standards, Weed did not acknowledge at the hearing that his conduct at the very least contravened his employer’s compliance standards, nor that he was in any way responsible for the breakdown in his relationship with his employer. That makes his prospects for a happy future with RBC dim. My lack of confidence is exacerbated by his avowal at the hearing that as between the bank’s standards and his own estimation of his client’s needs, he would disregard standards set by his employer.
201. I agree with RBC that the relationship between it and Weed has been irreparably damaged, and that reinstatement is not a feasible remedy.

The Adjudicator instead awarded him compensation in the sum of $230,000 which covered the period of time from his dismissal to the date of the award, a period of 35 months less mitigation income plus  a 15% reduction for what the Adjudicator thought was poor mitigation efforts.

In awarding costs the Adjudicator properly stated that :

It has now been established that an Adjudicator appointed under the Code has the jurisdiction to award costs. The leading case is Banca Nazionale del Lavoro of Canada Ltd. V Lee-Shanok [1988] F.C.J. 594, 1988 CarswellNat 254 (FCA). Stone J.A. determined the scope of the Adjudicator’s jurisdiction under s. 61.5(9)(c) of the Code [now s. 242(4)(c)]:
“I have no difficulty in reading it, with its broad reference to granting relief that is “equitable to require the employer to do in order to remedy or counteract any consequence of the dismissal”, as including the power to award costs. The difficulty I have is in viewing an award of compensation, gained at some considerable expense to a complainant in terms of legal costs, as having the effect of making him whole. Legal costs incurred would effectively reduce compensation for lost remuneration, while their allowance would appear to remedy or, at least, to counteract a consequence of the dismissal.” [para. 25]

 

The Adjudicator then went to refuse to award costs to the winning Mr Weeds with the following rationale.

212.  Counsel for Weed suggested that half of solicitor-client costs would be appropriate. However, I am going to adopt the reasoning in Pecoskie, supra. In that case, the Complainant was Executive Assistant to the Vice-President of Finance. She sent 35 emails that were “confidential and privileged” to her husband, who was a Project Leader in the same company. It was alleged she had also sent him emails that insulted and derided other managers and colleagues. Although her performance had previously been assessed in glowing terms, the company bypassed progressive discipline and dismissed her on the basis she had committed “a serious breach of trust, confidentiality and respectful workplace practices.” Adjudicator Clarke examined the emails in detail. They were largely related to issues that assisted her husband in his role at the company. A few said distasteful things about her manager and alleged that a colleague was not truthful. No one saw them but her husband. The Adjudicator determined that although she had violated the rules of the workplace, her actions were not sufficiently serious to warrant summary dismissal. Nevertheless, the Adjudicator made no costs award because the complainant could not be considered blameless.
213. Counsel for RBC submitted that no costs should be awarded given Weed’s conduct at the hearing. While I would not go so far as to say he made allegations that were proven to be false, I have already determined that that Weed has much to answer for in this matter, and I therefore decline to award costs.

This is a particularly troubling comment and result. The adjudicator seems to apply a exceeding high standard for a winning party to get costs, in that they apparently must be “blameless”, a standard which most of us would fail.

Although I am not usually the one to quote the New Testament, I am reminded of what Jesus said in John 8,  v 7. ESV:

“Let him who is without sin among you be the first to throw a stone at her.”

Let us do some math. The Adjudicator awarded $230,000.

Out of that amount he will have to pay his lawyer for a 14 day hearing and all the preparation. His lawyer was Richard Gilborn QC. Say a senior member of the bar in Calgary is charging his client $500/ hour or $4000 a day for a 8 hour day. Further assume that for every day of hearing there is about 2 days of preparation.

That makes for a bill of    14 X 3 = 42 days X $4000 / day = $168,000

The award was $230,000. After paying his lawyer he is left with $62,000 . Assume a conservative tax rate of 33%, he is left with $40,920.

Is that a  just result when one actually  wins a case ?

 

 

In Patterson v IBM ( 2017 CarswellOnt 2625) Justice Dunphy determined the appropriate notice period for a 67 year old Band 6 IT Specialist with 22 years service making $62,388 per year. He awarded a notice period of 18 months.

Dunphy J. made some interesting and helpful comments in the judgement on a number of topics:

1. The usefulness of summary judgements in notice cases.

4. Wrongful dismissal cases lend themselves particularly well to resolution through summary judgment proceedings. Cause is seldom at issue and the criteria to assess damages typically involve few disputed facts. The difference between the low and high end of likely damages is seldom as great as the costs of finding the answer following a full trial with all the trimmings. In my view, the practice of resolving wrongful dismissal damages cases in a co-operatively managed summary judgment proceeding is to be strongly encouraged: Arnone v. Best Theratronics Ltd., 2015 ONCA 63 (CanLII), Fraser v. Canerector Inc., 2015 ONSC 2138 (CanLII).

 

2. The Lesser Importance of Character of Employment 

20. I am also mindful of the fact that “character of employment” is a criterion that is often of limited value in the modern context. This is a point that our Court of Appeal has recently emphasized in cases such as Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469 (CanLII). It bears in my view only some weight in a case such as this. It may be that this particular criterion is fast becoming a vestige of a by-gone era. It is certainly difficult to defend on a principled basis. However the near universal application of Bardal over the last fifty-six years is such that I must leave the consideration of that issue to a higher court on another day. It is not of any great weight in this case and I shall leave it at that.

3. Use of  Prior Cases with the Same Defendant 

There has been a number  of wrongful dismissal cases involving IBM in the last few years on the issue of notice. In this case the Judge seemed to rely heavily on prior IBM cases as shown in this paragraph.

27. In Quinn v. IBM Canada Ltd. (unreported, CV-16-552858 released November 28, 2016), Myers J. awarded a 55 year old “Band 7” IBM employee 20 months of notice. Mr. Quinn had worked his entire working life at IBM with more than 35 years of service. In Waterman v. IBM Canada Ltd., 2010 BCSC 376 (CanLII); (affirmed 2013 SCC 70 (CanLII)), another “Band 7” IBM employee terminated at age 65 with 40 years of service was also awarded 20 months of notice. In Liboiron v. IBM Canada Ltd., 2015 BCSC 1523 (CanLII) a 57 year old Band 6 IBM employee with 32 years’ service was awarded 20 months. In Lee v. IBM Canada Limited, (unreported, CV-15-532014 released February 4, 2016) a 62 year old part-time employee with 40 years of service was awarded a notice period of 21 months. The “Band” of this employee does not appear in the decision but her full-time equivalent income would suggest that it was at a similar level (i.e. Band 6 or Band 7).
28. These four cases were relied upon by both parties with differing emphasis. They are useful comparators here not simply because they all involve the same employer. However, the IBM internal employee classification system in “bands” referred to by three of them provides at least a superficial basis of comparison of the character of the employment within the same organization. Two were one band higher while one was also in Band 6 (the fourth likely being in that same range). Importantly, the employees in question were all quite long-serving, in the upper age range and each was described as having quite challenging job prospects going forward. Three of these cases awarded 20 months of notice while one awarded 21 months of notice. These four employees had considerably more years of service to their credit than Mr. Patterson.
29. Every case turns on its facts and no two cases are exactly alike. That being said, these four cases are the most similar to the facts before me of any of the cases presented to me by the parties and recommend themselves to me for that reason.

This is similar to what happened in the Canac line of cases in which the Court relied primarily on other Canac cases in determining reasonable notice.

4. Determining how  the issue of future mitigation can be recognized in the calculation of damages given the period of reasonable notice has not yet expired. 

40.  It is only relatively recently we have managed to get to the point of being able to render a decision on wrongful dismissal damages while the period of reasonable notice is still running. The practice in such cases is divided. Some judges have opted to apply the “trust and accounting” approach and require the plaintiff to account to the defendant for future income if any earned during the notice period: Drysdale v. Panasonic Canada Inc., 2015 ONSC 6878 (CanLII). Others have reasoned that future employment income damages are like any other contingent future damages and can be calculated with appropriate discounts for contingencies if necessary: Peticca v Oracle Canada, 2015 ONSC 2584 (CanLII).
41. I don’t think there is any hard and fast rule requiring me to adopt either approach and I may look at both for guidance on how best to achieve justice between the parties on the facts of this case.
42. Of the two approaches, the discounted approach appears to me to be the most consistent with general principles of calculating damages. It is also an approach that commends itself on other grounds. A “once and for all” calculation removes the incentive, even if only subconsciously, for the plaintiff to be lukewarm in his search for a new position if all income earned would have to be remitted immediately to a former employer. Society and the parties are all unquestionably better off if the plaintiff is able to resume productive, taxpaying work as soon as possible. A discounted approach also avoids the possibility of future legal entanglements between the parties.
43. In the present case, the notice period found by me has seven months to run. I have found it preferable in this case to fold into my consideration of the reasonable notice period the additional consideration of a minor discount for potential future earnings over the seven months or so I have found remain to be run in the notice period. Given the plaintiff’s poor prospects, the amount would at all events be quite minor relative to the total award and it seemed to me to be preferable to arrive at a global damages award rather than attempt to parse it artificially. I have thus applied the discounted approach but chosen not to break it out in a separate calculation here.

I especially like his policy analysis in paragraph 42. It recognizes that both the general law of mitigation and the trust approach used in some cases creates a situation whereby if an employee were to find a new but somewhat lesser paying job early on during the notice period, he or she is effectively working for free for the balance of the notice period as the former employer gets full credit for every dollar the employee earns in his new job. I don’t know about you, but as much as I like my job, I am sure not doing it for free.

In Wood v Fred Deeley Imports Ltd ( 2017 ONCA 158, Justice Laskin dealt with the important issue of whether an ESA only contract was valid.

The termination clause read as follows:

[The Company] is entitled to terminate your employment at any time without cause by providing you with 2 weeks’ notice of termination or pay in lieu thereof for each completed or partial year of employment with the Company. If the Company terminates your employment without cause, the Company shall not be obliged to make any payments to you other than those provided for in this paragraph, except for any amounts which may be due and remaining unpaid at the time of termination of your employment. The payments and notice provided for in this paragraph are inclusive of your entitlements to notice, pay in lieu of notice and severance pay pursuant to the Employment Standards Act, 2000. [Emphasis added.]

Laskin J.A. first summarized the jurisprudence on interpreting employment agreements and referred to the following 8  principles.

1. In general, courts interpret employment agreements differently from other commercial agreements. They do so mainly because of the importance of employment in a person’s life. As Dickson C.J.C. said in an oft-quoted passage from his judgment in Reference re Public Service Employee Relations Act (Alberta), [1987] 1 S.C.R. 313, at p. 368:

” Work is one of the most fundamental aspects in a person’s life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person’s employment is an essential component of his or her sense of identity, self-worth and emotional well-being.”

2 . As important as employment itself is the way a person’s employment is terminated, it is on termination of employment that a person is most vulnerable and thus is most in need of protection: see Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701.

3. When employment agreements are made, usually employees have less bargaining power than employers. Employees rarely have enough information or leverage to bargain with employers on an equal footing: Machtinger, p. 1003

4. Many employees are likely unfamiliar with the employment standards in the ESA and the obligations the statute imposes on employers. These employees may not seek to challenge unlawful termination clauses: Machtinger, p. 1003

5. The ESA is remedial legislation, intended to protect the interests of employees. Courts should thus favour an interpretation of the ESA that “encourages employers to comply with the minimum requirements of the Act” and “extends its protections to as many employees as possible”, over an interpretation that does not do so: Machtinger, p. 1003.

6.. Termination clauses should be interpreted in a way that encourages employers to draft agreements that comply with the ESA. If the only consequence employers suffer for drafting a termination clause that fails to comply with the ESA is an order that they comply, then they will have little or no incentive to draft a lawful termination clause at the beginning of the employment relationship: Machtinger, p. 1004.

7. A termination clause will rebut the presumption of reasonable notice only if its wording is clear. Employees should know at the beginning of their employment what their entitlement will be at the end of their employment: Machtinger, p. 998.

8. Faced with a termination clause that could reasonably be interpreted in more than one way, courts should prefer the interpretation that gives the greater benefit to the employee: Ceccol v. Ontario Gymnastics Federation (2001), 149 O.A.C. 315, Family Counselling Centre of Sault Ste. Marie and District (2001), 151 O.A.C. 35.

Laskin thereafter dealt with the various attacks on the validity of the ESA clause under these headings :

1. Failure to provide for benefits during the ESA 8 week notice period.

The failure of the termination clause to actually refer to benefits was fatal. The term ” pay ” in the clause does not clearly include benefits. As this term is at best ambiguous, the interpretation that is to be favoured is the one favouring the employee.

The fact that the Company did in fact continue the Plaintiff’s  benefits after termination is irrelevant as it was an error of law to consider the post termination actions of the employer in interpreting the clause. One can only look at the wording and if it is illegal then the contract is null and void and cannot be used as a way of trying to determine what was  the true intentions of the parties.

Moreover in Roden v Toronto Humane Society the ONCA upheld a clause which did not mention benefits. However in that case the termination clause did not have an ” all inclusive ” clause like the one in this case that stated that :

If the Company terminates your employment without cause, the Company shall not be obliged to make any payments to you other than those provided for in this paragraph, except for any amounts which may be due and remaining unpaid at the time of termination of your employment. The payments and notice provided for in this paragraph are inclusive of your entitlements to notice, pay in lieu of notice and severance pay pursuant to the Employment Standards Act, 2000. [Emphasis added.]

Laskin J. found that this contract language difference was sufficient to distinguish the two cases.

2. Failure to refer to severance pay:

Simply put you cannot require an employee to work out his or her severance pay period by way of working notice. It must be paid as a lump sum within 7 days of the end of the last day of employment. The clause as drafted would have permitted the employer to require the Plaintiff to work out her entire 16 weeks of notice and severance, as she was employed for 8 years.

As this would have been contrary to the ESA, it is illegal .

Laskin J. upheld the trial judges assessment of 9 months reasonable notice. The Plaintiff was 48 years old, worked for 8 years as a Sales & Event planner making $100,000 per year.

This case is refreshingly easy to read and comprehend. It is almost as if Justice Laskin wants the average employer and employee to be able to read and understand it. Remarkable.

His clear listing of the 8 General Principles of Interpretation  of Employment Contracts and his application of those principles  to the facts provide us with a roadmap of how to approach similar cases in the future.

I wish Mr Justice Laskin had been on the  panel in Oudin v Le Centre Francophone de Toronto, Inc. ( 2016 ONCA 514 ). If so, I  doubt that it would have been decided in the way that it was.

Both Justices Feldman and Hourigan concurred with Justice Laskin’s reasons.

In previous blogs I commented that I wished that the Supreme Court of Canada would examine this issue of ESA contracts.

In light of this case, I think that is no longer necessary, at least for Ontario cases.

In Holmes v Hatch Ltd ( 2017 ONSC 379 ) Pollak J. awarded 18 months notice to a 54 year old Project Manager and Engineer with 17 years service .

The motion for summary judgement took place only 6 months after the termination of employment so the Court had to deal with how to award damages for the possible future loss.

This is what the Court did:

[33] With respect to the issue of the Plaintiff’s continuing duty to mitigate, I find that the evidentiary record does not allow this Court to make a finding on whether the Plaintiff will have any employment income loss during the balance of the notice period or whether he will successfully mitigate. Even though the Plaintiff has argued that he has not been able to find employment to the date of this motion, he moved for summary judgment knowing that it would be heard before he suffered any loss of employment income. To remedy this difficulty, the parties have advised the Court that they agree to follow the approach the Court has taken in the case of Markoulakis v. SNC-Lavalin Inc., 2015 ONSC 1081 (CanLII), 253 A.C.W.S. (3d) 362.

[34] The Court has determined that the total reasonable notice period for Mr. Holmes is 18 months. It follows that the Defendant has the obligation to pay Mr. Holmes the appropriate monthly compensation for the balance of the 18 month notice period subject to the deductions I have referred to above. The Defendant’s obligation to pay is also subject to the Plaintiff’s obligation to mitigate his damages and to a deduction in the monthly payments by the Defendant for any earnings from employment or a business. If during the balance of the notice period, the Defendant challenges the mitigation efforts or earnings of the Plaintiff and does not make such payments to the Plaintiff, the parties should determine the appropriate procedure for resolving this dispute.

[35] The parties have not agreed to, or provided the Court with, evidence on the amount of compensation Mr. Holmes is entitled to on a monthly basis for damages during the notice period. The Court has therefore only provided the parties with the above-noted legal determination of the duration of the reasonable period.

[36] Partial summary judgment is therefore granted by way of a declaration with respect to Mr. Holmes’ entitlement to 18 months’ damages for wrongful dismissal. The parties did not make any submissions on the procedure to be used if they require adjudication on the remaining potential issues and the calculation of “mitigation and damages”. I therefore make no ruling in this regard.
[37] At para. 78 in Hryniak, the Supreme Court of Canada held that:

Where a motion judge dismisses a motion for summary judgment, in the absence of compelling reasons to the contrary, she should also seize herself of the matter as the trial judge.

[38] In my view, this is an appropriate case for me to follow the Supreme Court’s direction and remain seized of any necessary future proceedings in this matter, such as a trial of the remaining issues. I must, however, qualify this to be subject to the practical reality of our court’s ability to schedule trials in a timely and expeditious manner. I will not be seized of this trial if the effect of my unavailability would be to delay the hearing of the trial between the parties. If it is possible to do so without adverse delay or consequences to the parties, I seize myself of the trial of this matter as directed in Hryniak.

I believe that this is a better approach to deal with the issue of ongoing damages than either the trust method or the discount method for the following reasons :

1. It best mimics what the law requires, that is paying compensation during the notice period less income earned through mitigation.
2. It allows Plaintiffs to have actual benefit coverage during the notice period rather than a payment in lieu.
3. It reduces the gamesmanship involved in setting the date for the motion for summary judgement in that no matter what the date is the duty to mitigate and the effects of mitigation remain the same,

I would however suggest that counsel should have suggested some procedure for adjudicating any future mitigation issues.

The parties could  agree that this issue would be decided either by arbitration or by returning to the motions judge. There should however be a provision that the employer is not allowed to unilaterally cut off the payments if they simply allege a failure to mitigate, rather they should be required to keep up the payments pending the Courts’ or arbitrators’ determination. This will avoid the circumstance of the Employer using the act of withholding payments as a pressure point to negotiate a discounted lump sum for the balance of the notice period. Any payment received by the Plaintiff in excess of what the Court or arbitrator determined was owing could simply be repaid.

The Labour and Employment section of the Ontario Bar Association, back in about 2009, produced a report for Chief Justice Winkler called the OBA Task Force on Wrongful Dismissal . In that report the Task Force had this to say about what they thought should be done about determining the on going payments after a motion for summary judgement.

The Court would assess the plaintiff’s mitigation efforts up to the date of the motion, and if the notice period continues beyond the date of the motion, the Court would, rather than order a lump sum payment of the entire notice period, order a payment to first bring the plaintiff’s wages and benefits up to the date of judgement. Then, the Court would make a further order that the defendant be required to continue to pay the plaintiff his or her salary and benefits to the end of the notice period, subject to the plaintiff’s continuing obligation to mitigate.

 If the plaintiff is to receive payments beyond the date of the motion, then the plaintiff will be required to report monthly, by statutory declaration to the defendant, what his or her mitigation efforts and mitigation income have been. The defendants’ payments would be reduced by any mitigation earnings, on a dollar for dollar basis. If the defendant believed that the plaintiff’s mitigation efforts were not reasonable, it could apply to the Court to amend the order requiring payment. The defendant could not unilaterally suspend the payments before the return date of the motion.

 If there were other issues that required determination, the Court could still order the payment of reasonable notice and order that the other issues be tried. For instance, if the parties agreed that the plaintiff’s base wage was $60,000 per annum but disagreed both on the quantum and the entitlement to a bonus, the Court could order monthly payments of the base wage only and defer the issue of the bonus entitlement to a full trial.

I was on that committee. it was a good idea then . It is still a good idea. I am glad to see that at least Madam Justice Pollak has adopted this procedure. I can only hope that it catches on with the rest of the Bar and Bench.

 

 

 

In Randhawa v The Bank of Nova Scotia ( HRDSC File # YM2707-10272 , not yet on CanLII ) Adjudicator Lorne Slotnick made these comments about the appropriate remedy in an Unjust Dismissal case under section 242 of the Canada Labour Code.

In Ly v Interior Health Authority ( 2017 BCSC 42 ) Justice Morellato found that a 38 year old manager with just over 2.5 months of probationary service was entitled to 3 months reasonable notice because the employer “did not meet its legal obligation to carry out a good faith assessment of Mr. Ly’s suitability for continued employment.”

The first issue facing the Court was the legality of the probationary clause which stated ” Employees are required to serve an initial probationary term of six ( 6 ) months for new hires.”

The Plaintiff argued that this provision was contrary to the BC Employment Standards Act which requires one weeks notice of termination  for employees who have 3 months service. Since the common understanding of the term ” probation” is that it allows termination  without notice, this provision offended the ESA and was thus invalid.

However this Judge saw it differently.

[50] Absent any express language to the contrary, a probationary term of employment is best understood as part of a contract of employment where: a) the employee is held to the requirement that for a specific period of time that employee must demonstrate certain suitability requirements set by the employer; and b) the employee may be dismissed without reasonable notice (subject to statutory minimums) if he or she does not meet the suitability requirements. If the employee meets the suitability requirements then, after that period of probationary assessment, the employee’s contract continues as a contract of employment wherein the requirements of just cause and reasonable notice apply.

[52] I have concluded that Mr. Ly’s employment comprised an express probationary term of six months duration coupled with the implied term as set out in Jadot: the employer’s contractual right to dismiss a probationary employee without notice and without giving reasons provided the employer acts in good faith in the assessment of a probationary employee’s suitability for the permanent position. However, the common law may be modified by statute and will not imply a term that is contrary to any legislated requirement or entitlement. Accordingly, the statutory entitlement found in ss. 63(1) of the ESA cannot be circumvented or breached by Mr. Ly’s terms of probation. In my view, however, no such breach occurred in the instant case.

[53] The statutory minimum found in ss. 63(1) of the ESA has not been circumvented or breached by Mr. Ly’s terms of probation simply because, as addressed above, there can be no implied contractual right of the employer to circumvent ss. 63(1) during Mr. Ly’s probationary period. The result is that a probationary employee is entitled to the benefits under ss. 63(1) of the ESA during the probationary period. In addition, the existence of the probationary period continues such that suitability also continues to be the standard until the probationary period is completed. In this case then, Mr. Ly was subject to a probationary period, along with the attendant standard of suitability, throughout the course of his short tenure with IHA.

In other words, the Judge interpreted  the meaning of probationary employment as incorporating the minimum statutory requirements of the ESA , so that what the term really meant  was that :

a) In the first 3 months of your employment we can terminate you without any notice .

b) For the balance of the probationary term in excess of three months we can terminate you upon providing you with the statutory minimums under the ESA.

Now if the clause had said something like ” The first 6 months of your employment are probationary therefore you can be terminated without notice at any time in this period” then of course the clause would be contrary to the ESA and thus be invalid. It is only because the probationary clause in this case  did not spell out the specific consequences of termination was the Judge able to read the text as being consistent  with the ESA.

In the secound issue the Judge  very closely examined whether the Plaintiff had been given a good faith assessment of his suitability for continued employment.

The  Judge first stated the legal test for a good faith assessment :

[57] As addressed above, the test for dismissal in the context of probationary employment is suitability. Just cause need not be established. An employer needs only to establish that it acted in good faith in its assessment of the probationary employee’s suitability: Jadot.

[58] In determining whether an employer acted in good faith, courts have examined the process through which the employer determines whether the employee is suitable for permanent employment. While an employer is not required to give reasons for the dismissal of a probationary employee, that employer’s conduct in assessing the employee is reviewed by the court in light of various factors such as:

1) whether the probationary employee was made aware of the basis for the employer’s assessment of suitability before, or at the commencement of, employment;

2) whether the employer acted fairly and with reasonable diligence in assessing suitability;

3) whether the employee was given a reasonable opportunity to demonstrate his suitability for the position; and

4) whether the employer’s decision was based on an honest, fair and reasonable assessment of the suitability of the employee, including not only job skills and performance but also character, judgment, compatibility, and reliability:

In applying the test to the facts , the Judge spent an amazing 27 paragraphs detailing the reasons for concluding that the Plaintiff was not given a reasonable opportunity to demonstrate his suitability for the job.

Among the factors that influenced the Judge was the following:

1. The Plaintiff had requested in writing, early on, some feedback from his boss on to how he  was doing. Management did not respond to this request.
2. It was understood from the beginning that there was a steep learning curve to the job and that it would take 6 months to a year to learn the intricacies of the job, however he was fired after only 2.5 months.
3. A Ms Erickson, one of the people he was now managing, was well liked by the close knit group of employees . Ms Erickson  had acted as the interim manager before the Plaintiff was hired . She  had competed for the manager job, but lost to the Plaintiff. It seemed that the  employees under the Plaintiff staged a ” palace revolt ” and convinced the bosses that the Plaintiff should go, otherwise they might  all quit.  After his termination, Ms Erickson was appointed to the Manager position. The coup succeeded.

One lesson to be learnt in this case is that probationary clauses are of little use.

The better practice is to draft straight forward termination clauses  that allow an employer to terminate an employment relationship without cause upon payment of a easily ascertainable  amount that increases as seniority increases.

If such a clause had been in place in this case, the Court would have no lawful reason to inquire into the “why” of the termination and the parties would have been spared a four day trial.

 

 

 

In Miller v Integrated Health Clinic ( 2016 BCPC 440 CanLII) Provincial Court Justice Chettiar had to determine the proper notice period for a 23 year old part time  lab tech with 17 months service making  about $26,000 a year .

In a remarkable 16 page decision he made a number of interesting comments about the task of determining notice periods for short service employees in BC.

First of all these are his comments that the Judge made when presented with Court awards from common law provinces across Canada :

22. I agree with the Defendant’s counsel that it is not necessary to look to cases outside of British Columbia to draw comparables to the present case. There is nothing unusual in the Claimant’s circumstances that guidance cannot be drawn from other BC cases. Therefore, I will not address the non-BC cases the Claimant’s counsel refers to. Besides, the Defendant’s counsel says all of the cases the Claimant relies on are distinguishable from the case at hand.

More importantly he views that all the law regarding notice periods for short service employees starts with the 2009 decision of the BC Court of Appeal in Saalfiel v Absolute Software Corp ( 2009 BCCA 18 ) and that prior cases are not to be considered.

First of all, he says only three of the eight cases are British Columbia cases, and all three of them predate the Saalfeld case which clearly dispelled the notion that five to six months is the normal range of the notice period for short service employees. The court in Saalfeld at para. 15 said as follows:

[15] … the respondent [employee] submits that recent jurisprudence supports a notice period of five to six months in short service cases. While B.C. precedents are consistent that proportionately longer notice periods are appropriate for employees dismissed in the first three years of their employment, I see little support for the proposition that five to six months is the norm in short service cases for employees in their thirties or early forties whose function is significant for their employer, but not one of senior management. … Absent inducement, evidence of a specialized or otherwise difficult employment market, bad faith conduct or some other reason for extending the notice period, the B.C. precedents suggest a range of two to three months for a nine-month employee in the shoes of the respondent when adjusted for age, length of service and job responsibility: [case citations omitted].

In the Saalfeld case the Plaintiff was 35 years old, and had 9 months service is a sales position. The Court of Appeal upheld the trial judges assessment of notice at 5 months, recognizing that she took 9 months to find a job.

In this case the Plaintiff was unemployed for 7 months. The judge found that her mitigation was reasonable .

One would have thought that the judge , having quoted Saalfed , would have followed it and awarded between 2 or 3 months notice.

After all Saalfeld was 35 years old and Ms Miller was 23, both young.

Saalfeld  had only 9 months service but Miller had almost double that time , namely 17 months .

Both had non-managerial jobs.

Saalfeld was unemployed 9 months, Miller 7 months .

Oh, by the way, Ms Miller was terminated as soon as she came back from her maternity leave. Great time to be looking a for a job.

What did Justice Chettiar award as notice : 6 weeks.

Quere? Why quote your own Court of Appeal and then not follow it ?

 

In Krishnamoorthy v Olympus Canada ( 2016 CarswellOnt 18204) Justice Dow had a situation where the Defendant purchased another company ( Carsen Group)  and offered employment to 99% of the predecessor company’s employees, including the Plaintiff.

At the time of his termination the Plaintiff was 58 years old, held the position of Executive Director of Finance and was employed a total of 15 years with the two companies.

The terms of the offer are set out in the decision as follows :

To that end, the defendant provided an offer of employment to the plaintiff on November 30, 2005 outlining the terms of employment which maintained the exact terms of the plaintiff’s employment with Carsen Group Inc. including:
a) transition payments for bonus calculations for pre Olympus employment in 2006;
b) that the “job will likely evolve and change over time”;
c) termination without cause will pay the greater of Employment Standards Act severance pay or four weeks’ pay per year up to a maximum of 10 months if a release is signed for service with Olympus or Carsen Group Inc. (with pay defined as annual salary divided by 52);
d) a mandatory retirement requirement at age 65 (not yet declared void by application of the Ontario Human Rights Code);
e) a severability clause permitting the balance of the agreement to remain in the effect if a particular clause is unenforceable;
f) the employee understands the terms of the agreement that he or she was to “be treated as a new employee” without reference to the opportunity to get legal advice; and
g) a release of not only the defendant from any “further claims but also for any claims against Carsen Group Inc.

During the course of his employment with Olympus, the Defendant acted in a way so that his prior service was in fact recognized.  For instance they

a) Gave him a 10 year plaque after only 5 years with Olympus but recognizing that he joined Carsen 10 years prior.

b) His Total Compensation Statement in 2014 showed that his date of hire was 2000, the year he joined Carsen.

c) His first payroll statement after Olympus purchased Carsen carried over his sick day and vacation credits.

Interestingly, with some other employees Olympus paid significant signing bonuses to get them to sign employment contracts , but alas the Plaintiff did not ask for nor receive such a bonus . He just kept his job exactly like it was before, except now he had agreed to a severance payment considerably less than his common law entitlement .

Then Dow J, had to decide whether the contractual termination clause was valid . He said as follows:

Issues — Validity of Termination Clause
8 .The defendant takes the position its employment agreement of November 30, 2015 is enforceable and rejects the variety of submissions made by the plaintiff to the contrary, The most compelling submission by the plaintiff is that the defendant failed to provide him with valid consideration for waiving his previous right to reasonable notice damages upon termination without cause, The plaintiff submits the employment was continuous and relies on the Employment Standards Act, 2000, S.O. 2000, c. 41 and Section 9(1) which provides for the employment being deemed to include the time that accrued with the seller of the business by the employee who continued with the purchaser of the business. In my view, the defendant did recognize this issue in the employer agreement but limited it to (10 years or 10 months’ notice).
9. The defendant submits the offer of employment was (sufficient) consideration. However, this appeal’s to be contrary to the conclusion reached by the Court of Appeal in Hobbs v. TDI Canada Ltd., [2004] O.J. No. 4876 (Ont. C.A.) where Justice Juriansz (at paragraph 42) states:
The requirement of consideration to support an amended agreement is especially important in the employment context where, generally, there is inequality of bargaining power between employees and employers.
10. The defendant points to the fact it is not the same employer as the plaintiff was working for and thus the employment agreement has not been “amended”. In my view, there are too many similar factors in the situation at hand to distinguish it in this way. That is, the remuneration, the duties to be performed, the substance and the nature of the business all remained the same. The only thing that changed would appear to be the employee’s right to reasonable notice on termination without cause.
11. I am reinforced in this conclusion by the position the defendant takes with respect to it honouring the plaintiff’s prior service with Carsen Group Inc. as well as the fact the defendant did pay (and likely wisely and more economically) some of the Carsen Group Inc. employees it recruited a signing bonus as part of securing their services,
12. In my view, my conclusion is also consistent with the rationale of the Court of Appeal in Holland v. Hostopia.Com Inc., 2015 ONCA 762 (Ont. C.A.) where the Chief Justice states; (at paragraph 53)
The law in this respect is a matter of simple fairness. It is also a matter of sound employment practice.
13. The result is the plaintiff is entitled to reasonable notice of termination at common law.

The Judge also made some interesting comments about the application of the Bardal factors in determining reasonable notice under the common law .

In relation to the character of employment  he wrote :

16, Regarding the character of the employment, it is not disputed that at the time of termination, the plaintiff was performing a senior executive role with the defendant. He was one of the few employees with signing authority. However, although not referenced by counsel in submissions before me, I understand that the principle of greater notice for highly skilled positions and less notice for clerical or unskilled work is of “declining relative importance” (Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469 (Ont. C.A.) at paragraph 27): Thus, this is not as strong a factor for a longer period of notice as it has been in the past.

This is the first time that I am aware of that the Di Tomaso case has been used to lower the notice period of executive rather than increase the notice period of a lower paid employee. This comment will likely further weaken the importance of character of employment in assessing reasonable notice .

In relation to age ( the Plaintiff was 58 at the time of termination ) he wrote :

18. Regarding his age, while the plaintiff would use this as a factor for a longer period of notice, it is presumably on the basis the plaintiff is unlikely to be rehired at this “older” age. In my view, the trend is in the opposite direction, that is not only do the demographics support individuals working longer in this Province but the abolition of a mandatory retirement age provides for this to occur. To the contrary, the parties have agreed that the plaintiff has taken all necessary steps to mitigate his claim by seeking alternative employment and no consideration need be made for dealing with an award that extends beyond the present.

I guess that todays’ age 58 is like yesterdays’ age 48. That mean that I am really only 53.

The Judge found that reasonable notice was 19 months.

The Defendant has filed an appeal.

I know this because Plaintiff ‘s counsel is my son, Matthew Fisher, a partner at Lecker & Associates.

In Bain v UBS Securities Canada Inc ( 2016 ONSC 5362 ) Justice D.A.Wilson had the task of determining the proper compensation for a  45 year old Managing Director, Head of Canadian M&A who had 13 years and 8 months service.  She determined that the correct notice period was 18 months,  based in part because he had been induced away from Employment at Bank of Nova Scotia, where he had been  for 5 years.

The Plaintiff lost his job though redundancy as they closed down the Canadian M&A division.

The interesting parts about this case involve how the Judge dealt with the various items of the Plaintiff’s compensation.

Entitlement to Bonus :

For the first 9 years , his bonus was all cash. Then in 2008 the bonus was split 40% cash and 60% in shares through the Equity Ownership Plan ( the EOP) . His bonuses ranged from a low of $225,000 to a high of $1.6 million. The only exception was 2011 when he received only $78,800, which was because UBS had to pay out a $2.5 billion judgement resulting from a fraud in their London office. In 2011 many UBS bonus were negatively affested like Mr Bain’s.

The Plaintiff was terminated on February 28, 2013, before the payout of the 2012 bonus. He was paid zero bonus for 2012 and for the time  he worked in 2013. All of his co-workers who held comparable positions received substantial bonuses for that period, except one other banker who was terminated at the same time as Mr. Bain.

Had he received a bonus payment for 2012, it would have been paid partly   as shares over a 5 year vesting period, with the first payment not occurring until March 2015. However all previous grants of shares that were granted prior to his termination would continue to vest after his dismissal.

In looking at the Defendants’ decision to pay zero bonus for the 14 months prior to termination, the Court said the following :

90. Simply because a bonus is awarded in the sole discretion of an employer does not mean that it can be done in an arbitrary or unfair fashion or that the employer can decide that an employee should not get a bonus without following a fair, identifiable process. The employer may adjust the weight given to various factors, given the market conditions and other changeable criteria, but that does not obviate the requirement that the exercise must be done in a fair manner. The court must analyze the evidence in a particular case and decide whether the process that was followed was fair and reasonable.

The Judge then noted the following :

1. UBS had a in place a comprehensive and detailed compensation plan in place with the stated goal of transparence and fairness.
2. Historically bonuses made up the bulk of the Plaintiff’s income, ranging from 66% to 90% of his total compensation.
3. For the period in question he received a performance review that exceeded his objectives on many counts .
4. Both his revenue and value of deals were up in 2012 from the previous year.
5. All of his comparators, except the other banker who was terminated, got substantial bonuses.

Why then did the Plaintiff get zero bonus ? His boss testified that it nothing to do with the fact that he was terminated. The Judge did not buy that.

103.  I am at a loss to understand on what basis UBS decided that Bain was not entitled to a bonus for 2012. Auclair’s testimony that notwithstanding his own assessment of Bain, he was “okay” with the decision not to give him a bonus, struck me as disingenuous. I do not accept that it was a coincidence that the only two managers who did not receive a bonus for 2012 were the two who were terminated. The timing of the terminations and the failure to grant a bonus does not assist the defence.

108. An employer is not bound to administer the bonuses in the same fashion each year; circumstances change, particularly in a volatile industry such as investment banking. However, the process followed must be fair and consistent among similarly situated employees. The fact that an employee is terminated because his job is redundant does not relieve the employer from exercising its discretion fairly.
109. I agree with the comments of Wilton-Siegel J. in Chann, where he stated, “The fact that the decision to terminate the plaintiff’s employment had been made did not remove the need to approach the process of decision-making in the same manner as in past years. The plaintiff was contractually entitled to have his remuneration determined on the same basis as in prior years and for other employees in the same year.”
110. Similarly, Bain was entitled to have his bonus for 2012 determined by UBS in the same manner as it did for other employees, and as it had done historically. I conclude that the fact that Bain was being terminated was the driving factor behind the decision of management not to award him a bonus. Despite Auclair’s denial of a link between the dismissal and zero bonus, the email from Murray, dated February 16, 2013, when the decisions were being made, confirms that the subjects of compensation and headcount were “inextricably linked”. In my view, UBS did not treat Bain fairly when dealing with the 2012 bonus and contravened their own process and stated intention to be transparent and objectively based.

The Employers’ second argument was that he was not contractually entitled to a bonus payment because a term in his Total Compensation Statement for 2011 had the following provision :

You will not earn and have no right (whether contractual or otherwise) to be paid nor be eligible to receive any discretionary incentive award if you are not in employment with UBS on the Incentive Payment Date or if either you or UBS have served notice of termination on or before the Incentive Payment Date. 

The Incentive Payment Date was March 15th , by which time the Plaintiff was gone.

However the judge did not accept that by virtue of those terms, the Plaintiff has disentitled himself to a bonus payment .

112. It is submitted that Bain accepted those terms, and the terms of his employment letter no longer govern. UBS argues that an employee’s rights, including the right to a discretionary bonus, can be limited or eliminated by clear contractual language. UBS argues that Bain is not entitled to a bonus for 2012 because he was dismissed prior to the payment date.
113. The difficulty with this argument is that the evidence in this case does not support it. The evidence on what transpired after 2008 was sparse, leading me at times to wonder what the employees were told about the changes that would be in effect after the takeover and what difference, if any, that made to the terms under which they were employed with UBS.
114. There was no evidence that Bain accepted a fundamental change to his entitlement to a bonus. In cross-examination, the document indicating that if he was not employed with UBS at the time of the payment of a bonus, he would not be entitled to the bonus, was put to Bain. It was suggested to him that by accepting his bonus, he also accepted the terms set out in that document. Bain testified that the statement was given to him, there was no discussion about the terms of his bonus for 2011, and he never agreed with its contents. There was no evidence that these new limitations were brought to the attention of Bain by UBS, discussed with him, accepted by him and formed part of his contract of employment.

116. There are a number of documents from UBS which were filed in evidence that make reference to the bonus scheme. The Defendant cannot “cherry pick” certain portions from the documents that assist the position of the defence and submit that the Plaintiff agreed with these terms simply because he continued to be employed by UBS. There are other provisions in the Compensation Plans that are in direct opposition to the argument advanced by the defence.

117. For example, in the Common Terms of the Compensation Plans for 2012, section 7.1.2 states, “Nothing in the Plan Rules, the Common Terms, or the operation of a Plan forms part of the contract of employment of an employee. The rights and obligations arising from the employment relationship between the employee and the corporation or any member of the Group are separate from and not affected by a plan.”

118. In my view, the reasoning set out in Schumacher, is applicable to the case at hand. In that case, the plan provided that employees had to be actively employed at the time the bonus was paid, in order to receive it. Schumacher was constructively dismissed and the employer took the position it did not have to pay the bonus pursuant to the terms of the agreement. The court stated:
His involuntary inability to comply with the condition of the PCP ought not to be justification for the Bank in declining the award of the bonus as part of Schumacher’s damages. If that were the case, an employer would achieve a significant advantage by wrongfully terminating an employee because the severance package would not have to include any bonus. Where the bonus was promoted as an integral part of the employee’s cash compensation, it would be inappropriate and unfair to the employee to be deprived of the bonus by reason of the unilateral action of the employer. I do not agree with the position taken by the Bank on this third issue. Schumacher remains entitled to consideration of a bonus, both for the period he worked and the notice period.
I agree with this reasoning and find it is applicable to the case of Bain.
119. Bain was terminated at the time that bonuses were determined and paid to UBS employees. He worked diligently during 2012; there was no hint of his pending dismissal. He expected payment of a significant bonus, as had been the custom for the prior 13 years he had been with UBS. He was dismissed on February 28, so if I accepted the argument of the defence, he became disentitled to a bonus through the unilateral actions of UBS, over which Bain had no control. In my view, that would be an unfair result. He ought to have been considered for a bonus, just as the comparators were. The same evaluation process ought to have been followed as with the other directors, using the same objective criteria in a transparent manner. This was not done.

Quantum of Bonus :

Unlike many other bonus plans that involve the forfeiture on cessation of employment of unvested but outstanding bonus payments, this plan provided that in terminations due to redundancy only, the unvested awards would continue to vest after the termination date.

Therefore, if UBS had properly assessed his bonus he would have been awarded a 2012 bonus, payable in the 5 years following.

She also rejected the concept that she had to figure out the cash portion and the shares portion of the bonus and award the damages separately . The Judge indicated that :

Bain is not seeking the EOP award, so whether or not those shares would have vested during the notice period is not determinative. Bain is seeking damages at common law for compensation for his salary and bonuses which he would have earned had UBS not terminated his employment and failed to give proper notice. Bain had the right to work and receive his usual remuneration throughout the notice period or be paid in lieu thereof. That did not occur, and he is entitled to damages. The comments of the court in Paquette are applicable to the case at hand: “[T]he appellant is entitled to compensation as part of his damages for wrongful dismissal for the loss of his bonus for 2014 … and the lost opportunity to earn a bonus in 2015”.

In determining the amount of the bonus the judge looked at what the relevant comparators earned for the 2012 period, and averaged that amount, which came to $533,866 for the 2012 year.

For the time that he worked in 2013 ( a total of 2.75 months as he was given some working notice) Again the judge looked at what the comparators earned in 2013, divided it by 12 and multiplied it by 2.75. This came to another $242,380.

Again, for the notice period itself the judge used the average of what the comparators made in the same time frame. This came to another $1,285,044 in bonus payments over the notice period.

His total bonus entitlement for the 32.75 months of unpaid bonuses came to $2,061,290.

Not a bad payday.

Vacation Pay :

The parties agreed that the Plaintiff was owed 20.10 days vacation pay .

How much is one days vacation worth ?

Is it based on the Plaintiff’s measly salary of $385,000 or his total compensation of $1,562,650?

The ESA refers to wages as including ” sums paid as ..bonuses that are dependant on the discretion of the employer and that are not realted to hours , production or efficiency ”

This convoluted statutory language means that if a discretionary bonus is based on either hours worked, production of efficiency, then it counts as wages and thus attracts vacation pay.

In finding for the Plaintiff , the Judge said :

153.  The evidence at trial made it clear that the bonus paid to directors at UBS was based on performance, the employee’s contribution to various transactions, the revenue generated by that employee’s participation in various deals as well as a number of other factors set out by UBS. The bonus was based, in part, on how an employee produced and how diligent he or she was in their work at UBS. Thus, I do not find section 1(1) is applicable and precludes inclusion of the bonus when calculating entitlement to vacation days.

This netted the Plaintiff a cool $87,472 just in vacation pay.

The total judgement, exclusive of costs, was $2,596,268.

I am advised that UBS is appealing the decision on the issue of bonus and vacation pay.

My Comments:

On many   separate occasions in her award , the Judge comments that the actions and /or the positions of the Defendant were ” unfair”, especially when it comes to their decision to pay zero bonus, not just for the notice period ( which is common ) but more importantly for the previous year that the Plaintiff actually worked.

I wonder what the outcome would been had they paid him some bonus, based perhaps on his average over the previous two years ? Would the Court have viewed that as a reasonable exercise  of the Employers’  discretion  and thus not interfered with the decision?

Furthermore, if the bonus constituted “wages ” under the ESA, which the Judge found it did, then how can an Employer ever put a limitation or condition on whether or not to pay these wages?

Would this not constitute an attempt to contract out of the ESA, which is prohibited under Section 5(1) of the ESA?

The only time that an Employer can withhold the wages owing to an employee is in accordance with Section 13 of the ESA, none of which would justify the withholding of an earned bonus .

We all know that an employment contract which required the employee to be a employee on the payday, otherwise they forfeit their wages would be illegal . Why is any different if that earned wage is simply called a bonus?